Vol. III No. 5 - Saturday January 31 - February 6 2004
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BUSINESS NEWS
HEADLINES [click on headline to view story]:

New Year doldrums for Chinese food offerings

Tax measures to boost use of alternative energy

ASEAN ministers push for economic community

Oil Fund may be used to halt price fluctuations

Jewelry exports likely to grow 15% this year

BOT to scrutinize credit card consumerism

Use of gasohol on the rise

Repurchase rate to remain unchanged

Leslie Wright battling the Crab

New Year doldrums for Chinese food offerings

Businesses that normally look forward to Chinese New Year as members of Thailand’s Chinese community flock to purchase items for use in religious offerings faced the doldrums this year due to soaring prices of eggs, chickens and pork.

A report published recently by the KASIKORN Research Center, formerly the Thai Farmers Research Center, had anticipated more money would be spent this year, with half of the money going towards religious offerings. However, the rising prices of eggs, chickens and pork, which together form an important component of the offerings, saw producers of these goods miss out on a golden opportunity.

However, there was better news for fruit sellers, thanks to the free trade deal on fruits and vegetables signed with China last year, which forced down prices of fruits by as much as 20 percent. (TNA)


Tax measures to boost use of alternative energy

The Ministry of Energy is preparing a raft of tax measures designed to encourage the use of alternative energy, including wind, water, biomass and solar power, from the current 0.5 percent to 7.5 percent by the year 2011.

Siriporn Sailasuta, Director-general of the Department of Alternative Energy Development and Efficiency, said that her department has been asked by the ministry to study measures to promote the use of alternative energy in order to reduce the country’s fuel imports. Tax measures are likely to include the carrot of tax concessions for users of alternative energy sources, in particular industries which consumed large quantities of energy.

“In addition, the Ministry of Energy will focus on the promotion of research and studies on the use of alternative energy in Thailand, with the government providing partial financial assistance,” Siriporn said, adding that more companies investing in Thailand will be using alternative energy sources which is now required by current legislation. (TNA)


ASEAN ministers push for economic community

The Association of Southeast Asian Nation’s (ASEAN) dream of creating a region-wide economic community edged closer to becoming realized on January 21 when ASEAN economic ministers met in the Indonesian city of Yogyakarta for an unofficial meeting and agreed on a plan to see the birth of the AEC by 2020.

According to the plan, agreed by Thailand’s Commerce Minister Watana Muangsook and his counterparts from the nine other ASEAN member states, the region will work on the coordination of operations in 11 types of goods and services with the eventual aim of creating the ASEAN Economic Community (AEC).

The 11 branches in question include agriculture, rubber, timber products, fabrics, electronic goods, automobiles, information technology (IT), health products, tourism and aviation. Thailand has been made responsible for the tourism and aviation sector, and has already joined with Singapore to announce an open sky- policy on commercial flights, starting in February of this year.

The ASEAN ministers also met with European Union trade officials, agreeing to expand cooperation in terms of trade and investment. The EU will negotiate with representatives of ASEAN’s private sector at a workshop to be held in Bangkok in March, while in May the EU will help organize a seminar on EU food safety regulations during the THAIFEX trade exhibition.

Vietnam and Laos, meanwhile, were given assurances by the other ASEAN members that they would receive full ASEAN backing in their bids for WTO membership. (TNA)


Oil Fund may be used to halt price fluctuations

The Energy Policy and Planning Office (EPPO) is studying the possibility of using money from the Oil Fund in order to accumulate oil reserves, and to prevent future price fluctuations.

EPPO Director-General Metta Bangturngsuk revealed that despite the fact that the government was set to float the price of cooking gas in April, it would continue to collect money from oil users to go into the Oil Fund in order to pay off old debts incurred by government efforts to cap cooking gas prices.

Currently the government has to pay around 5 billion baht, or 400 baht per month, to gas and oil refineries as part of the debt repayment program.

The government is also likely to invest in energy stability measures by creating strategic oil reserves when oil prices are cheap in order to keep prices down when global prices rise.

“Approaches to oil reserves must be studied hand-in-hand with the land bridge project in the south, as the two projects are related. We need to see who will benefit from the oil storage facilities that will be constructed. It is possible that we will negotiate the borrowing of oil from traders for storage in the land bridge’s storage facilities, which can be used when oil prices are high. This could be in exchange for greater state facilitation for oil traders,” Metta said. (TNA)


Jewelry exports likely to grow 15% this year

The country’s jewelry exports are likely to grow 15% this year, with total value of US$2.5 billion, as a result of tax incentives and efforts to seek new markets, according to an industry executive. Preeda Tiewsuwan, Chairman of Pranda Jewelry Plc. projected that the jewelry business would grow on par with the government’s intention to promote Bangkok as a fashion hub.

Jewelry exports totaled $2.31 billion in the first 11 months of last year, and were expected to reach $2.5 billion next year. Biggest gains are predicted in the major destinations of the US, Germany and United Kingdom. (TNA)


BOT to scrutinize credit card consumerism

The Bank of Thailand (BOT) has stated it will closely monitor the credit card market and may also review the current requirement regarding the minimum monthly salary of card holders in response to worries over Thais’ spending habits.

BOT Governor Pridiyathorn Devakula said, “The BOT needs to evaluate whether the minimum monthly salary of 15,000 baht set for card applicants is appropriate for current economic conditions. There is concern over the social issue of encouraging the public to spend too much through credit and becoming burdened by debt.”

Pridiyathorn conceded credit cards have become an important tool in modern economic systems. However, the central bank will seek precautionary measures to avoid social problems that may arise from the credit card business. He stressed that too much spending could eventually destroy what has traditionally been a culture of saving, especially among low income earners.

The central bank currently requires card issuers to charge clients a combined interest rate and service fee of not more than 18 percent a year, which enables banks to gain a 10 percent spread - the difference between the interest rate and the cost of card issuance.

Pridiyathorn said, “This rule has encouraged credit card issuers to exercise more caution when it comes to expanding the card holder base.”

According to BOT figures, as of end-September, 2003, domestic commercial banks issued a total of 2.86 million credit cards, while non-bank firms issued a total of 3.57 million credit cards. (TNA)


Use of gasohol on the rise

The government, through the Ministry of Energy, is launching a campaign, encouraging motorists to turn to use ‘gasohol’, which is the mixture of gasoline and alcohol in the 9:1 proportion on the average, following a recent oil price hike in the domestic market, caused by rising oil prices in the world market.

An initial survey found that sales of ‘gasohol’ at petrol stations have been increasing, reflecting that more motorists were turning to use the alternative fuel, which is about 0.50 baht cheaper than benzene.

Energy Minister Prommin Lertsuridej said earlier this week that he had turned to use ‘gasohol’, and had faced no problems. (TNA)


Repurchase rate to remain unchanged

The Bank of Thailand (BOT)’s Monetary Policy Committee has decided to keep the repurchase (RP) rate unchanged, as internal and external economic environments still remain sound, according to BOT Assistant Governor Bandid Nijathaworn.

After a meeting of the central bank’s Monetary Policy Committee, Bandid said, “The committee considered the current monetary policy and interest rates to be appropriate and in accordance with the country’s economic conditions, and resolved that the RP rate be maintained at 1.25% annually.”

Bandid explained, “A thorough review of the country’s latest economic data and indicators showed that expanding consumption, investment and exports, as well as a surplus current account, high-level foreign reserves, and lower foreign debts confirm Thailand’s economic stability. The inflation rate is also being maintained at around 0.2 percent. These factors make the current interest rate suitable.” (TNA)


Leslie Wright battling the Crab

Long time Chiangmai Mail contributor Leslie Wright, Managing Director of Westminster Portfolio Services, author of the weekly Family Money column that usually appears on this page, and author of the inspiring series, “Battling the Crab”, is currently in critical condition, battling cancer, in ICU room 301 at Bamrungrad Hospital, Bangkok. Chiangmai Mail, as well as all his friends and associates, wish him all the best. We pray for a speedy recovery.



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